One of the key reasons for the global financial crisis was that there were too many inadequately monitored financial products in the market.
That a fool and his money are easily parted is a well-known saying. No one proved this better than a man called Victor Lustig who, in 1925, sold the Eiffel Tower twice — once successfully. What Lustig did was brilliantly simple: he got hold of a bunch of greedy scrap-dealers and, on the basis of a forged government document, told them that he was the deputy director general of the department of Posts and Telegraph and had been asked by the French government to sell the tower off as scrap as it was too expensive to maintain. Since originally the tower (built for the 1899 Paris expo) was to have been dismantled in 1909, everyone believed him. Lustig charmed the scrap-dealers off their feet and warned them that they were not to talk about the sale as the matter was a top state secret. But he had already decided on the buyer, whom he had correctly assessed as a greedy and corrupt fool, and convinced him saying that, as a government official, he was open to a little lolly on the side. Lustig then took his money for the tower and went off to Vienna — only to return some months later and try the same stunt again, believing rightly that the first buyer would not spill the beans. However, this time he did not succeed because word had gotten out. But Lustig was never arrested.
Citibank, which has just seen an employee pull off a similar stunt of fooling the greedy with promises of high returns backed up by forged documents, would do well to pay heed to this tale because frauds of this nature happen as greed and dishonesty come together to form an unbeatable combination. It has to ask itself how it failed to catch on. After all, it does boast that it has very sophisticated technologies and management systems. It also needs to convince customers that it is not dozing on the job while the fleet-footed make off with the booty. One way of achieving this might be to temper its own search of profits at any cost through a large number of investment products or schemes. A fraudulent product or scheme is more likely to succeed when there are 50 such products/schemes on offer than, say, 20. Let it not be forgotten that one of the key reasons for the global financial crisis, of which Citibank was a prominent victim, was that there were far too many financial products in the market which could not be monitored properly.
Indeed, as the Lustig saga shows, only luck can prevent lightning from striking twice at the same place because the world is generously endowed with persons who are rich, greedy and careless, of whom the crooked take advantage. In fairness, though, it must be said that anyone can be taken in by good manners and forgeries. Thus, even eternal vigilance may not be sufficient to prevent fraud.
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